Latest news with #financialSystem
South China Morning Post
07-07-2025
- Business
- South China Morning Post
Hong Kong dollar faces prolonged weakness on liquidity, rates drawback, bank says
The Hong Kong dollar faces prolonged weakness because of substantial liquidity in the local financial system and a wide gap between local and US interest rates, according to strategists. The local currency could trade near HK$7.85 per dollar – the weak side of its HK$7.75 to HK$7.85 trading band – over the next three to six months, Standard Chartered Bank said in a report on Friday. Sizeable carry-trade positions and a poor asset growth outlook would slow the pace of liquidity tightening from currency-market interventions, it said. The Hong Kong Monetary Authority (HKMA) intervened four times since late June to defend the local currency from weakening beyond HK$7.85 per US dollar, reducing the aggregate balance – a measure of liquidity – by more than a third to HK$114.5 billion. The local currency may find equilibrium when the balance drops by another 50 per cent or so, based on precedents, the bank said. 'We see liquidity continuing to be drained by interventions. But this process is likely to be lengthy, taking over three months or even the entirety of the second half,' said Becky Liu, head of China macro strategy, who co-authored the report. 'Liquidity conditions may stay looser for longer this time around.' Standard Chartered's Wealth Management Centre in Central. Photo: Nathan Tsui Some factors in Hong Kong were slowing the HKMA's liquidity draining moves, she said. The housing market slowdown had crimped demand for loans, while diversification from US dollar assets had fuelled deposits. Both would further depress the loan-deposit ratio in Hong Kong from a 16-year low, she added.
Bloomberg
01-07-2025
- Business
- Bloomberg
Volatile Quarter-End Signals Funding-Market Dysfunction to Come
Rates in the US funding market surged at the end of the quarter in a sign of potentially further dislocations in money markets as Congress lifts the debt ceiling. Volatility intensified on Monday beyond the typical spikes seen at the end of months and quarters. That's fueled concern among some market participants about dysfunctions in the plumbing of the US financial system and the ability of the market to absorb the deluge of bills once the debt ceiling is resolved.
Washington Post
27-06-2025
- Business
- Washington Post
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
NEW YORK — All the major banks passed the Federal Reserve's annual 'stress tests' of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. The Fed said it went with a less vigorous test because the global economy has weakened since last year, and therefore the test tends to weaken. Further, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly . The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed did do what it calls an 'exploratory analysis' of the private credit market, which concluded the major banks were 'generally well-positioned' to withstand losses in the private credit market. That analysis was entirely separate and not part of this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week.
Yahoo
27-06-2025
- Business
- Yahoo
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
NEW YORK (AP) — All the major banks passed the Federal Reserve's annual 'stress tests" of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week. Ken Sweet, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Associated Press
27-06-2025
- Business
- Associated Press
Big banks all pass the Federal Reserve's stress tests, but the tests were less vigorous this year
NEW YORK (AP) — All the major banks passed the Federal Reserve's annual 'stress tests' of the financial system, the central bank said Friday, but the test conducted by the central bank was notably less vigorous than it had been in previous years. All 22 banks tested this year would have remained solvent and above the minimum thresholds to continue to operate, the Fed said, despite absorbing roughly $550 billion in theoretical losses. In the Fed's scenario, there would be less of a rise in unemployment, less of a severe economic contraction, less of a drop in commercial real estate prices, less of a drop in housing prices, among other metrics compared to what they tested in 2024. All of these less harmful, but simulated, drops mean there would be less damage to these banks' balance sheets and less risk of these banks of potentially failing. Since the banks passed the 2024 tests, it was expected that the banks would pass the 2025 tests. 'Large banks remain well capitalized and resilient to a range of severe outcomes,' said Michelle Bowman, the bank's vice chair for supervision, in a statement. An appointee of President Trump, Bowman became the Fed's vice chair of supervision earlier this month. It's not clear why the Fed chose to go with a less vigorous test this year. In a statement, the bank said previous tests had shown 'unintended volatility' in the results and it plans to seek public and industry comment to adjust stress tests in future years. The Fed also chose to not test the banks as heavily on their exposure to private equity assets, arguing that private equity assets are typically held for the long term and are not typically sold at times of distress. The Fed also didn't test for any bank exposure to private credit, a $2 trillion asset class that even Fed researchers themselves have observed to be growing alarmingly quickly. The Federal Reserve Bank of Boston recently pointed out that private credit could be a systemic risk to the financial system under a severe adverse scenario, which is exactly what the stress tests are supposed to test for. There was no wording or phrasing in the Fed's press release, reports or methodology about testing or measuring private credit or private debt in this year's test. The Fed's 'stress tests' were created after the 2008 financial crisis as a way to gauge whether the nation's 'too big to fail' banks could withstand another financial crisis like the once that happened nearly 20 years ago. The tests are effectively an academic exercise, where the Fed simulates a scenario in the global economy and measures what that scenario would do to bank balance sheets. The 22 banks that are tested are the biggest names in the business, such as JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs, which hold hundreds of billions of dollars in assets and have wide-ranging businesses that touch every part of the U.S. and global economy. Under this year's hypothetical scenario, a major global recession would have caused a 30% decline in commercial real estate prices and a 33% decline in housing prices. The unemployment rate would rise to 10% and stock prices would fall 50%. In 2024, the hypothetical scenario was a 40% decline in commercial real estate prices, a 55% decline in stock prices and a 36% decline in housing prices. With their passing grades, the major banks will be allowed to issue dividends to shareholders and buy back shares of stock to return proceeds to investors. Those dividend plans will be announced next week.
